Data from FMDQ shows that total inflows into the Nigerian Foreign Exchange Market (NFEM) rose sharply by 62.2% month on month to $5.15 billion in October from $3.18 billion, marking the highest level in five months. Before then, capital inflows into the economy stood at $5.6 billion in the first quarter of 2025, the National Bureau of Statistics (NBS) data shows. The inflows represent significant gains from diverse reforms instituted by the Central Bank of Nigeria (CBN) to make Nigeria attractive destination for local and foreign investors, reports Ibrahim Apekhade Yusuf
For many stakeholders, rising FX inflows into the economy is an indication that financial sector stability is buoying investors to the domestic economy.
There is rising interest from domestic and global investors in Nigeria assets, as seen in the latest capital inflows to the country.
The rising investors’ interest is linked to fallout of crucial reforms instituted by the Central Bank of Nigeria (CBN) under the Olayemi Cardoso leadership.
Upon assuming office in October 2023, the apex bank leadership had prioritised reforms to rebuild Nigeria’s economic buffers and strengthen resilience.
CBN’s policies, including the currency reforms, led to investment inflows from abroad, and reduced interventions in the domestic forex market.
The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.
Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy.
Cordros Securities Limited in an update to investors explained that the surge reflected strong participation from both foreign and domestic investors, supported by improving market sentiment and the global shift toward monetary policy easing.
Foreign inflows—which accounted for 64.5% of the total—soared by 89.7% month on month to USD3.32 billion, up from USD1.75 billion.
The significant increase, according to Cordros Securities Limited, was driven mainly by a rebound in Foreign Portfolio Investment (FPI) inflows, up by 120.7% in Oct, and higher receipts from the Other Corporate segment, which climbed by +30.5% in the same period.
This offset the decline in Foreign Direct Investment (FDI) inflows, which reduced by 25.5%, according to data cited by Cordros Securities Limited.
Also, domestic inflows increased by 28.4% in October driven by a surge in individual contributions, which surged by +370.6%, and a 30.8% inflow surge from Other Corporates.
“We expect total foreign exchange inflows from both domestic and foreign sources to remain robust, surpassing the 2024 average level of USD 2.51 billion, driven by sustained market confidence and still-attractive carry-trade opportunities,” Cordros Securities Limited said in a note.
Assessing reforms impact on FX inflows
These reforms have led to surge in capital inflows into the Nigeria economy. The inflows rose to $5.6 billion in the first quarter of 2025, the National Bureau of Statistics (NBS) report has shown. The inflows represent 67.12 per cent jump from $3.4 billion recorded in the same period of last year.
The latest “Nigeria Capital Importation Q1 2025” report released represents 10.86 per cent surge from the $5.1 billion reported in fourth quarter of 2024.
“In Q1 2025, total capital importation into Nigeria stood at US$5642.07 million, higher than $3.37 billion recorded in Q1 2024, indicating an increase of 67.12 per cent. In comparison to the preceding quarter, capital importation increased by 10.86 per cent from $5.08 billion in Q4 2024,” the report stated.
The NBS also stated that portfolio investment ranked top with $5.2 billion, accounting for 92.25 per cent, followed by other investment with $311.17 million, accounting for 5.52 per cent.
The report indicated that, “Foreign Direct Investment recorded the least with $126.29 million accounting for 2.24 per cent of total capital importation in Q1 2025.”
According to the NBS, the banking sector took the lead with the highest inflows in Q1 2025.
The report stated, “The Banking sector recorded the highest inflow with $3.1 billion, representing 55.44 per cent of total capital imported in Q1 2025, followed by the Financing sector, valued at $2.09 billion (37.18 per cent), and Production/Manufacturing sector with $129.92 million (2.30 per cent).”
The report further noted that capital importation during the reference period originated largely from the United Kingdom with $3681.96 million, showing 65.26 per cent of the total capital imported.
In emailed note to investors, Managing Director, Afrinvest West Africa Limited, Ike Chioke, explained that Portfolio Investment (92.2 per cent of total capital) dominated flows, rising by 30.1 per cent quarter-on-quarter, and 150.8 per cent year-on-year to $5.2 billion.
The bulk of the FPI flows was to Money market instruments (up 162.2 per cent year-on-year to $4.2 billion), while Bonds (up 108.5 per cent) and Equities (up 137.7 per cent) attracted $877.4 million and $117.3 million respectively.
Rebased GDP presents new opportunities
Nigeria’s hope of achieving $1 trillion economy by 2030 will gain significant support from the banking sector.
Nigeria’s Statistician-General, Adeyemi Adeniran, had explained how the economy fared in the rebased Gross Domestic Product (GDP) report. He said: “In nominal terms, the rebased GDP for 2019 stood at N205.09 trillion N213.63 trillion in 2020, N243.30 trillion in 2021, N274.23 trillion in 2022, N314.02 trillion in 2023, and N372.82 trillion in 2024”.
The NBS noted that in 2019, the rebased nominal GDP at basic prices represented an increase of 41.7 per cent over the nominal GDP of 2019 of the old base year (2010), 39 per cent in 2020, 38.7 per cent in 2021, 36.1 per cent in 2022, 34.6 per cent in 2023 and 35.4 per cent in 2024.
“The results show that the structure of the Nigerian economy has changed significantly with a rise in the share of agriculture and services sectors and a fall in the share of the industries sector in nominal terms, indicating a shift in the structure of the Nigerian economy than earlier reported,” the NBS said.
Adeniran further explained that the rebasing allows the country to better reflect the realities of the economy. “It’s not just about a bigger number but about accurate, timely data that supports smarter policy and economic planning,” he said.
Banking sector to the rescue
A well-recapitalised banking sector is undeniably crucial for the growth of the domestic economy. Hence, Olayemi Cardoso, Central Bank of Nigeria (CBN) governor, advised banks to prepare for a new round of recapitalisation to ensure they have the necessary capital to support the Federal Government’s plan to achieve $1 trillion Gross Domestic Product (GDP) target by 2030.
He said that President Bola Ahmed Tinubu’s economic plan aims to reach a $1 trillion GDP by 2030, emphasising that the current bank capitalisation is insufficient to support such a large economic scale.
Cardoso asked: “Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. That action was the ongoing recapitalisation of banks, meant to prepare them for expansion and attract big ticket transactions to support economic growth.”
The Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a GDP of $1 trillion, with clearly defined priority areas and strategies.
Adeniran revealed that incorporated new and emerging sectors, consumption baskets update, and data collection refining methods helped produce a more complete picture of national output.
Aliyu Ilias, developmental economist, noted that several sectors have previously remained un-captured in official data, particularly entertainment. “By rebasing our GDP now, included those areas properly. This new visibility will make Nigeria appear much stronger to foreign investors, which will naturally help us attract more capital,” he said.
He explained that the exercise will also reveal untapped economic potential and guide government resource allocation. “It will show where we are strongest structurally, such as in mining or other emerging sectors. That insight will help the government focus its efforts more strategically.”
“Finally,” he added, “it will support economic policy formulation, helping us align our strategy with the reality on the ground. We will know exactly where to put more effort.”
Ilias explained that while this statistical adjustment does not instantly generate new revenue, it creates a more reliable framework for fiscal planning, investment strategies, and development interventions.
For him, by aligning economic data with current realities, the government and private sector can more effectively target policies that stimulate job creation, improve productivity, and sustain long-term growth.
Seun Onigbinde, director of Civic Technology Group BudgIT, said the previous rebasing underscored the substantial impact of policy changes in the services and ICT sectors, such as telecommunications deregulation and banking sector recapitalisation. “Rebasing of the GDP must reflect changes in the economy, which are a product of public policies over time,” he added.
Rebasing is also critical for domestic policy. It allows the government to better assess tax collection efficiency, measure sectoral contributions, and design social programmes that are data-driven and results-oriented.
While commenting on the rebasing, Gabriel Okeowo, former Country Director for BudgIT, said, “Rebasing allows planners to be more intentional about solving Nigeria’s biggest problems: poverty, infrastructure gaps, and job creation.”
Lagos-based economist, Nelson Adedeji, explained that despite the bump in GDP size, the rebasing never a silver bullet.
“We must acknowledge that genuine economic growth extends beyond statistical adjustments. For ordinary Nigerians to experience meaningful improvement in living standards, the President Bola Tinubu administration must complement GDP rebasing with substantive policies addressing infrastructure deficits, security challenges, agricultural productivity, manufacturing capacity, and the overall ease of doing business,” he stated.
Views from stakeholders
While US President Donald Trump’s widening trade war has taken emerging markets on a wild ride, Nigeria has quietly held its own, attracting foreign capital reassured by currency reforms and other measures designed to revive the economy of Africa’s most-populous nation.
“Nigeria appears to be back in business as long-awaited economic reforms take shape,” said Emre Akcakmak, portfolio manager at East Capital. Key measures include improved currency liquidity, leeway for investors to repatriate their profit, and the stable naira.
“We feel the Central Bank of Nigeria will continue to stem any sharp appreciation of the naira to limit profit taking from the fast money community,” Akcakmak said.
“Portfolio inflows have likely been supported by improved confidence amid key structural reforms, better FX market functioning and moderating dollar-naira volatility, as well as the still-robust nominal yield buffer,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc told Bloomberg.
“Besides, Nigeria’s local market is seen as less correlated with global risk conditions than more liquid EM peers,” he said.
The Nigeria’s economy and businesses will have so many things to cheer in 2025 and the impact of the economic reforms in FX market, exchange and huge budge outlays begin to pay off for them.
How S&P rating is boosting FX
Expectedly, economic and financial experts who have reviewed the outcome of the S&P rating have stated that this will bode well for the economy, with positive rippled effect.
In a chat with The Nation, renowned economist and Founder, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the new rating is very positive for the Nigerian economy.
According to him, “It positions Nigeria in good standing to attract both foreign portfolio and foreign direct investment. It is also good for the private sector as it makes it easier to attract capital.
“This is premised on the impact of the positive rating on Nigeria country risk and perception as an investment destination. It would also moderate insurance and interest costs generally. This rating is also a reflection of the progress that has been made with regards to current economic reforms,” he stressed.
Echoing similar sentiments, Mr Oladele Adeoye, Chief Operating Officer, DataPro, one of the foremost rating agencies in the country said the development was something to cheer about.
While admitting that the positive outcome of the rating may not percolate the average Nigeria just yet, Adeoye however argued that it is a boost to the macroeconomy ultimately.
“You know, Nigerians’ understanding of economic improvement is that the average man on the street is able to buy something less than he or she was buying before now. But for the economic managers, it’s something to be excited about because when your outlook is improved from stable to positive by a rating agency, what that means is that there are indices that are being monitored by the rating agency, and that the country now has a high possibility of its long-term rating being increased from what it is as of now. So if not for anything, literally, what that means is that you are doing something that is exciting or that is reassuring to the rating agency, and that the improvement that they are monitoring is actually pushing you, economically speaking, towards your rating being improved. So for the economic managers, it’s something to be excited about. It means that if they put a little bit of effort into what they are doing currently, the rating of Nigeria will likely change.”
Pressed further, the DataPro chief, who tried to draw a correlation between rating and economic change, said, “Improved rating simply means that you can borrow cheaper as a country than you were doing presently. It means that your credit quality has improved as a country. And because your credit quality as a country has improved, investors are willing to lend you money.
“And when investors lend you money, your risk premium is priced lower than your counterparts that are borrowing from the same market. So from that point of view, what does that mean? That therefore means that Nigeria as a country can borrow at a cheaper rate, and you will not have to use all your revenue to be servicing your debts. And they can channel those funds, whether the ones gotten directly by way of borrowing or the portion of the revenue that is being used to service the debt.
“All of these can be combined together at this point in time and can be channeled to other aspects of the economy that can enable business and enhance productivity. And that is where it gets exciting. Where such an enabling environment can be created, it therefore means that productivity will improve and that we have direct bearing on GDP. So that is the connection. So in one way, it is correct. We can now use money that has been used to service debts to now begin to channel them to improving infrastructures and creating an enabling business environment within our country.”
